Caterpillar points finger at UAW

Wednesday

Jul 25, 2007 at 12:01 AMJul 25, 2007 at 7:10 PM

Caterpillar filed two third-party lawsuit against the UAW today, contending the union is breaching its contract by sponsoring the retiree lawsuits that are based on issues the UAW agreed to in bargaining. Therefore, the company says, the UAW should share any cost burdens if the company is held liable for taking away free health care for its retirees. Efforting UAW comment.

Paul Gordon

Caterpillar Inc. contends any costs incurred as a result of two class-action lawsuits filed against the company by its retirees and their surviving spouses should be paid by the United Auto Workers.

That’s because it was joint action by the union representing Caterpillar’s active and retired hourly employees — that of bargaining and ratifying contracts that capped health care costs for the retirees — that led to the retiree lawsuits the company says the UAW is sponsoring.

That’s what Caterpillar contends in a pair of federal third-party lawsuits the company filed against the UAW on Wednesday. The lawsuits name the UAW International and seven locals that represent Caterpillar employees and retirees — including Local 974 in East Peoria — as defendants.

Caterpillar filed the lawsuits in federal court in Tennessee — the same court hearing the retiree lawsuits — claiming the union is just as responsible as the company for collectively bargained contracts on which the retiree lawsuits are based and therefore should be party to the original lawsuits.

"This is not in any means directed toward our employees or our retirees," said Dan Day, corporate human resources manager for Caterpillar. "Rather, this is to hold the UAW accountable for their own actions."

Tim Elder, director of corporate public affairs for Caterpillar, said the union asked the company to bargain on the retiree benefits issue and that the two sides reached agreement on the co-payments and benefit caps.

"It is inconceivable to us that the group who negotiated the agreement for the retirees are now saying that agreement is invalid and unfair. It’s the action of the hired representative we have an issue with, not the retirees," Elder said.

The lawsuits filed by retirees and surviving spouses, each claiming terms of previous contracts make them eligible for free health care coverage for life, are set for trial in 2008.

The provisions for free health care coverage for retirees were bargained away by the UAW in contracts ratified in 1998 and 2005. Caterpillar said it first placed caps on health costs when it implemented a contract in March 1992, during a lengthy labor dispute with the UAW.

In the existing contract Caterpillar still makes lump-sum health care payments and higher pensions for retirees at a cost of millions of dollars annually, the company said. In exchange for that, the union agreed to active members paying part of their health care premiums for the first time and to give up performance bonuses for its membership.

Should the retirees prevail in their lawsuits and order Caterpillar to resume free health care and possibly pay damages, the company contends the UAW should pay any costs above what the company already pays.

Further, the company said in its lawsuits, a breach of contract — if ruled as such by the court — would enable Caterpillar to void the existing contract in place since January 2005 and set to expire in 2011.

The UAW declined to comment on the lawsuits Wednesday. Union spokesman Roger Kerson said the UAW legal staff hadn’t yet seen the lawsuits.

Dave Chapman, president of UAW Local 974, also declined comment, deferring to UAW International in Detroit. Chapman did say the company informed its workers it was going to take the action before filing the lawsuits.

Michael Mulder, a Chicago attorney representing one of the retiree classes, said he could not comment before seeing the lawsuits. He said he’ll likely file a response with the U.S. District Court in Tennessee.

Caterpillar officials said it’s unknown when U.S. Judge Aleta Trauger would rule on whether the UAW should be equally liable, but said it would likely be closer to the time the retiree lawsuits go to trial.

It would be up to the judge, should the retirees prevail, to decide how much if any of the financial burden should be shifted from Caterpillar to the UAW, they said.

One of the retiree lawsuits was filed in Nashville by Gary Winnett, Freda Jackson-Chittum and other retirees or surviving spouses. It contends free health benefits are owed them and about 4,000 other retirees because they retired between Jan. 1, 1992, and March 16, 1998. They contend provisions of a 1988 contract between the UAW and Caterpillar, which expired in November 1991, remained in effect until a new contract was ratified March 16, 1998.

However, Caterpillar contends capping health benefits was one of the provisions of the contract it implemented in 1992 and thus those retirees are not eligible for free health care.

The other retiree lawsuit was filed by Judith Kerns, Marcia Nalley and Sandra Stewart, surviving spouses of Caterpillar employees who retired between March 16, 1998, and Jan. 10, 2005. It also contends they are entitled to free health benefits.

While the UAW is not party to either retiree lawsuit, Day said Caterpillar officials "have knowledge that the UAW has had some input, particularly in the Kerns case. The UAW is a sponsor, if you will."

Pressed for more details, Day said, "Let’s just say we are fully aware the union is deeply involved in that litigation."

Day said he did not know how the lawsuits will affect the company’s relationship with the UAW, which has almost always been contentious.

However, a labor relations expert told the Associated Press there could be an affect on future contract bargaining.

"My guess would be no matter which way the suits come out, it’s probably going to have an impact on the next round of talks, not so much in terms of animosity levels but in terms of a new issue to bargain about," said Peter Feuille, head of the University of Illinois’ Institute for Labor and Industrial Relations.